Current Ratio Calculator
This current ratio calculator compares short-term assets with short-term liabilities. Example: 80,000 cash, 120,000 receivables, 150,000 inventory and 250,000 current liabilities give a current ratio of 1.4.
Example: Cash and equivalents 80,000 · Short-term receivables 120,000 · Inventory 150,000 · Current liabilities 250,000 → Result: Current ratio = 1.4 (140 %). Source: Wikipedia – Current ratio. Updated: .
How it is calculated
Liquidity ratios compare short-term assets with short-term liabilities. They show how well a company could cover its debts that fall due soon using balance sheet items, and come in three levels depending on which assets are counted.
The three levels
The cash ratio relates only cash to current liabilities. The quick ratio (acid test) adds short-term receivables. The current ratio also counts inventory, so it covers all current assets. This calculator uses cash, receivables and inventory as the current assets.
Worked example
Cash 80,000, receivables 120,000, inventory 150,000, current liabilities 250,000. Cash ratio: 80,000 / 250,000 = 0.32. Quick ratio: 200,000 / 250,000 = 0.8. Current ratio: 350,000 / 250,000 = 1.4, which is 140%.
- Industries with fast turnover often manage with lower values than companies holding large inventories.
- It is a snapshot at one date and does not show cash flows over time.
Frequently asked questions
How is the current ratio calculated?
Divide current assets by current liabilities. In the example: 350,000 / 250,000 = 1.4.
What is the difference between the quick ratio and the current ratio?
The quick ratio counts only cash and receivables, the current ratio adds inventory. The current ratio is therefore at least as large as the quick ratio.
What is a good current ratio?
There is no universal answer. A value above 1 is often mentioned, but industry, inventory turnover and payment terms decide what is reasonable.
Sources and legal basis
As of: · Editorial policy
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